Sarah has a checking account at First Bank. Orrin steals one of her blank checks, writes a check for $250, and then forges Sarah's signature. He then presents the check to First Bank for payment. First Bank pays the forged instrument. Which of the following statements is correct?
A) First Bank will have to recredit the $250 to Sarah's account if she so requests, if Sarah was not found to be negligent.
B) Orrin is responsible to First Bank for the $250.
C) Sarah is primarily liable if she was negligent in allowing Orrin to take the blank check.
D) All of these.

Question

Quizplus · Accepted Answer

First Bank is liable to Sarah for the $250 because it paid a forged instrument. Orrin is responsible to First Bank for the $250 because he forged Sarah's signature. Sarah is primarily liable if she was negligent in allowing Orrin to take the blank check.

Sarah Has a Checking Account at First Bank